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A Study On The Influences Of Islamic Values On
Iranian Accounting Practice And Development
Mahdi Salehi1
Arash AriyanPoour2
Abstract
The main purpose of the current paper is the study of objectives and characteristics of Islamic
accounting and its challenges in Iran. In order to achieving the objectives of the study, a
questionnaire designed and developed among the 120Iranian bankers clients’. Further, ten
hypotheses are postulated for obtaining a good results for the study. The results of conducting
the tests indicate that if we use Islamic accounting, importance of gain and loss do not
decrease, there is no more emphasize on social matters and paying attention to Zakat cannot
be considered as a barrier and limitation. So far, several studies have been conducted in both
Muslim countries as well as non-Muslim countries; however, the current study is the first
study which have focused on Iran as Muslim country and the results of the study may useful
to other researchers that may carry on the study about Islam around the world.
Keywords: Islamic Accounting, Zakat, Shari'a, Iran
1. Introduction
Over the past 25 years, a complex network of interlinked economic, social and
political changes has considerably contributed to the wealth held by Muslims and to
their need to make the most of this wealth according to the principles of Islam (Dima
et al., 2010).
Accounting is a product of its environment (e.g., Perera, 1989; Choi and Mueller,
1992; AlHashim and Arpan, 1992; Radebaugh and Gray, 1993). As such, a country's
accounting system may be significantly influenced by a variety of environmental
factors such as size and complexity of businesses, the presence of specific accounting
legislation, the speed of business innovations, the level of economic development and
growth pattern, the status of professional education and organisation, and the social
climate (e.g. Choi and Mueller, 1992; AlHashim and Arpan, 1992; Radebaugh and
Gray, 1993). In addition, the relationship between Islam and accounting could be a
significant one (Gambling and Karim, 1991; Hamid, Craig and Clarke, 1993;
Baydoun and Willett, 1994).
1 Ferdowsi University of Mashhad, Iran
2 Allameh Tabatabie University, Tehran, Iran
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Islamic society’s religion in fact, significantly influence the manner accounting is
practiced as such; there is a need to develop a specific accounting model that may
serve Islamic societies better (Hofstede, 1980). Since Islam has its own cohesive
rules that dictate how a business should be conducted, for accounting theory and
practices to be relevant to devout Muslim users, theories must be developed in
accordance with the Islamic Shari'a (Gambling and Karim, 1991).
The Shari’a, the blueprint of an ideal Islamic society, concerns the practical aspects
of being a Muslim, manifesting his faith and belief (Sulaiman, 2003). Hamed (2000)
showed that Malaysian Moslem accounting academicians perceived that Islamic
organizations should follow Shari'ah/ethical principles and promote social welfare
rather than concentrate on profits.
There have been arguments that the Shari’ah will affect how the components of a
conceptual framework for accounting should be viewed (e.g. Adnan and Gaffikin,
1997; Gambling and Karim, 1991; Shihadah, 1987; Zaid, 1995). Accounting should
be no different from other aspects of Muslim life in that it should be based on the
provisions of Shari’ah. However, this seems to allow for two alternative ways of
developing an Islamic conceptual framework for accounting. One approach would be
to establish concepts and objectives in a deductive manner from fundamental Islamic
principles. To some extent, this was the approach adopted in the normative literature.
The other approach is to start with the concepts established in contemporary
accounting and test them against Shari’ah. In this study, objectives and characteristics
of Islamic accounting are expressed and Islamic accounting challenges in Iran are
discussed.
1.1 Islamic Accounting
Islam has a different worldview that affects the socio-economic activities of its
adherents. As accounting is a social institution that should reflect the norms of its
society and help to achieve its socio-economic objectives, a different type of
accounting is required as compared to the conventional accounting of capitalistic
society (Yahya, 2004).
Much of the theoretical, normative and prescriptive research in Islamic economics,
finance and accounting emphasizes the social and moral character of these disciplines
(Kamla, 2009).
The term “Islamic accounting” can have a temporal and spatial implication. It can be
a form of shorthand meaning “accounting in parts of the world where Islam is the
majority religion during periods when Islam has been dominant” (Napier, 2007).
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There can be different meanings of Islamic accounting. First, it can be understood in
a religious sense when the accounting rules are influenced by the religious dogma.
Second, the label Islamic accounting can be applied to those countries where Islam
had been the dominant religion at a certain moment in time. Given this last remark,
must be mentioned that the influence of this religion on the national accounting rules
may differ considerably from one country to another (Dima et al., 2010).
Mueller (1968) argues that different business environments need different accounting
systems and the closest he gets to Islamic countries is the reference to one group
represented “the developing nations of the Near and Far East” which might need
standardized accounting systems. This idea has repeatedly been presented by the
modern literature as Islam is seen different from Occident, so it must have its own
accounting system (e.g., Gambling and Karim, 1986). However, the development of
Islamic financial institutions was the one that contributed significantly to the
emergence of a modern literature on Islamic accounting (Dima et al., 2010).
1.2) Issues of Islamic accounting: Riba and Zakat
Muslim countries are now attempting to align their economies to accord with the
tenets of Islam. Consequently, this phenomenon would, in turn; impact on the manner
accounting is practiced. Two issues that figure prominently in the development of
Islamic accounting are Riba (interest) and Zakat. The Islamic social order is based on
the principles of equality, justice and brotherhood and the concepts of freedom and
responsibility. The word Riba literally means "increase", "addition", "expansion" or
"growth" (Sulaiman, 2003). The wider definition of Riba appears to refer to any
forms of taking advantage of the poor and the ignorant (Gambling and Karim, 1986)
The Shari'a refers to Riba as the premium that is paid by the borrower to the lender.
According to Chapra (1992), the consensus of Muslim jurists is that Riba and interest
are synonymous. However, in a broader context, Riba includes any unfair trading
practices (Gambling and Karim, 1991).
Islam does not recognize premiums as representing a safeguard against risk. Muslims
believe that uncertainty is something that an individual has to face in this world.
Muslims are expected to bear their share of whatever misfortune befalls them
(Gambling and Karim, 1991). They cannot safeguard against their risk at another's
expense. Charging interest shifts the risk from lender to borrower (Siddiqi, 1981).
What this will eventually lead to is the widening of the gap between the rich and the
poorer members of society. Consequently, the result will be a weakening of the bond
of brotherhood which may eventually lead to jealousy, hatred and animosity
(Sulaiman, 2003).
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Zakat is a religious tax that every Muslim, whose wealth exceeds a certain Nisab
(minimum amount), has to pay. This is essentially a wealth tax and it ranks second in
importance only to prayers as a feature of everyday witness to the Islamic faith
(Sulaiman, 2003).
From El-Ashker (1987) viewpoint, Zakat is a religious tax. Mannan (1986) disagrees
with this definition. According to him, defining Zakat as a religious tax would mean
that Islam recognizes the separation between religion and economics or the
separation between the spiritual and wordy matters. Islam recognizes no such
dichotomy. Perhaps the definition is of lesser importance. Of greater significance is
its objective, that of redistributing wealth (e.g. Al- Buraey, 1990; Mannan, 1986).
From the economic point of view, Zakat prevents the morbid accumulation of wealth
in a few hands and allows it to be more widely distributed (Sulaiman, 2003).
Gambling and Karim (1991) contend that one of the major objectives of accounting
in an Islamic society is to provide information to enable the individual to determine
his Zakat liability. However, in the following four cases, Islamic jurists have come to
a consensus that a company would be required to satisfy the Zakat obligation itself
either as an entity or on behalf of its owners under the following conditions:
1. When the law requires the company to satisfy the Zakat obligations as an entity.
2. When the company is required by its charter or by-laws to satisfy the Zakat
obligation as an entity.
3. When the general assembly of shareholders passes a resolution requiring the
company to satisfy the Zakat obligation as an entity.
4. When individual owners authorize the company to act as their agent satisfying the
Zakat obligation (SFAC, 1).
Askary and Clarke (1997) suggested that one objective of Islamic financial reports is
measuring and collecting Zakat.
However, the influence of Riba (interest) on Islamic accounting lies in the capital
structure of a company and its influence on the disclosure practices of an enterprise.
Additionally, it is argued that financial reports should enable Muslims to determine
Zakat liability and ultimately achieving socio-economic justice (Sulaiman, 2003).
In respect to the parallel between conventional and Islamic accounting, many authors
attempted such comparison in general or for specific standards (see for instance
Baydoun and Willett, 2000; Haniffa and Hudaib, 2001). According to them, the main
differences between conventional and Islamic accounting have to do with the
following:
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● General economic aspects such as Secular versus religious, Economic rationalism
versus Unity of God, Individualism versus collectivism, Profit maximization
motive versus reasonable profit, Absolute versus relative ownership.
● Specific accounting issues like:
Conservatism: apply prudent valuation methods and avoid using the most favorable
influence owners versus most favorable to community;
On going concern: business goes forever versus based on contractual agreement
between parties;
Measuring unit: monetary value versus quantity and monetary based (according to
Zakat calculation);
Consistency based on the standards/regulations used by the entity versus consistency
with Islamic law;
Materiality: decision-making usefulness versus fulfilling all duties before Allah;
Users of financial information: identifying economic events and transactions versus
identifying socio-economic and religious events and transactions.
2) The Objectives of Reporting from the Islamic Perspective
On a basic Islamic level, God requires Muslims to record their transactions; Islam
thus provides a general guideline for the recording and reporting of transactions
(Lewis, 2001). Islam’s emphasis on such recording shows the importance of fulfilling
rights and obligations. This is related to the Islamic belief that doubt and uncertainty
need to be removed from inter-personal arrangements (Askary and Clarke, 1997).
The Islamic view of accountability is based on two main themes. The first of these is
the concept of Tawhid, which implies total submission to God’s will, and adherence
to the religious requirements in all aspects of life. Muslims have to devote themselves
to God as the fundamental aspect of their behavior (Napier, 2007). The second main
theme is the concept of ownership in Islam. God is the ultimate owner of everything.
God has appointed man his vice-regent (Khalifa) on earth and entrusted him with
stewardship of God’s possessions (Lewis, 2001).
The main objective for accounting in Islam is thus to fulfill accountability to God.
This clearly differentiates the Islamic accounting model from that of the western
model, where accountability to stakeholders such as owners is given priority. From
the Islamic perspective, businesses are seen as extensions of the individuals that
constitute them (owners in particular but also managers and workers). Businesses and
individuals have to abide by the rulings of Shari’ah in all transactions they undertake.
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This includes avoiding borrowing or lending with interest, manufacturing alcohol,
and gambling. Another objective of reporting is to show compliance with Shari’ah,
which is regarded as equivalent to following God’s will (Napier, 2007). This
objective led to the claims that accounts prepared under Islamic principles should use
current values rather than historical costs. The implication for businesses is that they
should provide information to help Muslims undertake their religious duties (Maali et
al., 2006).
Accounting under Islamic perspective would enable the readers to understand the
supremacy of Islamic Accounting over conventional accounting system. Islamic
Accounting system would help fixing responsibility and accountability of the
functional managers and other executives while fixing responsibility is the core of
Islamic principles. In Islam, responsibility and accountability are the main theme.
Islam implies a series of principles that can be resumed as:
● Unity of God (tawheed): A most important concept of Islam’s philosophy of
nature is the central Islamic concept of Tawheed (De Chatel, 2003; Omar Naseef,
1998) which implies a comprehensive worldview; an integration between world
and Islamic principles (truth, justice, fair, goodwill, honesty, benevolence,
accountability before God); the unity and equality of all God’s creations in the
worship of God and their equality as partners in terms of respect and appreciation
towards the existence of all and the interconnectedness between all (Kampla et
al., 2006).
● Trusteeship implies that people are given a special role in relation to the
environment. The human being is appointed a trustee (steward) or Khalifah
(Lewis, 2001) that will not abuse people for personal interests but will maintain
the balance, spreading justice, truth and virtue.
● Community principles: the purpose of Shari’ah is “to promote the welfare of the
people, which lies in safeguarding their faith, their life, their intellect, their
prosperity and their wealth”. In economic terms, these principles have to do with
social responsibility and public accountability ensuring the community with the
fact that the entity is continuously operating within the socioeconomic
boundaries of the Islamic Shari’ah (Dima et al., 2010).
● The importance of knowledge (Ilm), especially self-knowledge is connection to
the notion of developing a sustainable community, by promoting developments
of the intellect, wisdom and knowledge (Tinker, 2004).
● The holistic approach to life has to do with the wider environment, Islam being
concerned to protect the environment and maintain the balance between the
material and spiritual needs of all human beings. This principle has the most
evident association to sustainable development, emphasizing the negativity of
waste, obsessive extravagance (Israf), excessive consumerism and conspicuous
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consumption (Kampla et al., 2006). The holistic approach to life has a significant
influence on economics (Chapra, 1992) and so the Islamic economic systems
should be viewed from such a perspective (Gambling and Karim, 1991). This
approach leads to the notion of the fair distribution of wealth through Zakat.
This is one of the Five Pillars of Islam, is the giving of a small percentage of one's
possessions to charity. The Muslims have the duty to collect zakat and to fairly
distribute it (Dima et al., 2010).
In what follows, we will discuss the research background and then the research
method. In the next stage, there will be a conclusion along with suggestions for future
researches.
3. Literature Review
Relatively few historical studies covering accounting in Muslim countries have
appeared in English-language journals, so it should not be a surprise that the writers
of general histories of accounting have little if anything to say about accounting in
these locations.
The emergence of Islamic banks and other financial institutions since the 1970s has
stimulated a modern literature that has identified itself as addressing “Islamic
accounting”. Much of this literature is prescriptive, though studies of actual practice,
and of attitudes to proposed alternatives, are beginning to emerge. Historical research
into Islamic accounting is still in a process of development, with a range of studies
based on both primary archives and manuals of accounting providing growing insight
into accounting in state and private contexts in the Middle East. Other parts of the
Muslim world are also the focus of historical accounting research. There is still much
to discover, however, before historians can determine the influence of Middle Eastern
accounting ideas and practices in other parts of the world. Moreover, the term
“Islamic accounting” may simply be a convenient label to group together quite
disparate accounting practices and ideas across time and space (Napier, 2009)
The proposition that Islam may have an impact on accounting and reporting has been
investigated using a range of methods. Idris (1996) tested perceptions of preparers of
financial statements in both Islamic banks and commercial banks that provide
“Islamic windows” (separate departments offering transactions consistent with
Islamic principles) regarding the items that should appear in the annual reports of
Islamic banks. The respondents expressed the view that conventional statements like
the balance sheet and income statements are the most important. However, the
Shari’ah supervisory report two ranked as slightly important, as did the statement of
changes in Zakat and charity funds.
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Sulaiman (1998) tested Baydoun and Willett’s argument that current value balance
sheets and value added statements would serve the needs of Muslims largely than
historical cost balances sheet and income statements. She compared the perceptions
of Muslims and non-Muslims in Malaysia regarding this issue through a
questionnaire survey, which she distributed to four user groups: bank lending
officers, financial analysts, Zakat officers, and accountants.
Sulaiman (1998) found no difference in the perception of the usefulness of both
current value balance sheets and value added statements between Muslims and non-
Muslims. In addition, even Muslims other than Zakat officers did not consider the
current value balance sheet to be particularly useful for calculating Zakat. Sulaiman
(2001) further tested the Baydoun and Willett (1997) position using an experimental
approach, and again found no evidence of a religion effect.
There were an increasing number of the studies related to Islamic accounting issues.
These studies related to why the conventional accounting is inappropriate for Islamic
organizations. Hameed (2000) describes that the practical necessity for the
development of an Islamic accounting is the establishment of Islamic business that
are specifically based on the Shari'ah. The objectives, operations and practical
accounting requirements of these organizations need an alternative accounting. These
organizations should use Islamic accounting and still use accepted disclosure
standards for conventional annual reports. Islamic banking in Indonesia use
Statement of Financial Accounting Standard No 59 to prepare their financial
statements.
Baydoun and Willett (2000) considered the contents of Islamic corporate reports.
They argued that the historical value balance sheet should still be used because of the
problems associated with current value such as reliability. However, the authors
suggested that a current value statement should also be part of Islamic corporate
reports. The principles of full disclosure and social accountability require Islamic
businesses to issue such a statement, and current value information is necessary for
the determination of Zakat. An interesting proposal is that Islamic corporate reports
should include a value added statement. Baydoun and Willett (2000) justified this
because they considered that an Islamic society would wish for greater awareness of
the social impact of firm activities. A value added statement stresses entity
performance from a community viewpoint as opposed to focusing on owners, which
is consistent with the Islamic view that firms are accountable to the community. The
authors claimed that an income statement corrupts Islamic values through its solitary
focus on one dimension of firm performance and an emphasis on the self at the
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expense of community. They proposed relegating the income statement to the notes
to the accounts. In addition, they argued that Islamic reports should contain much
more extensive data about social costs and benefits created by the Islamic
organization. For the same reasons provided by Baydoun and Willett (2000),
Sulaiman (2000) supported the use of both current value balance sheets and value
added statements as part of Islamic business enterprises’ corporate reports.
Lewis (2001) discussed the effect of Islam on accounting, and concluded that
concepts of full disclosure and social accountability are essential in Islamic
accounting. Lewis further argued that from an Islamic perspective, the concept of full
disclosure is at variance with ideas of window-dressing, creative accounting, and
emphasis on legal form over substance. In addition, the Islamic concept of social
accountability makes it clear that the Islamic accountant’s prime obligation is to the
Umma (the Islamic community).
Harahap (2002) explains that even though The Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI) have been established the
accounting standards for Islamic banking are mostly based on conventional
accounting concepts and principles. With Islamic banks providing more financial
support to Islamic compliant businesses, one would expect an increase in businesses
conducted strictly in accordance with Islamic principles (Hamid et al., 1993) and in
turn, this would be expected to impact on accounting practices (e.g. Gambling and
Karim, 1991; Hamid et al., 1993; Baydoun and Willett, 1995).
Another research has indicated that there is a relationship between accounting and
culture (Gray, 1998; Perera, 1989; Salter and Niswander, 1995; Doupnik and
Tsakumis, 2004) and one system cannot be transplanted into another cultural
environment without causing dysfunctional effects on the host culture and society.
Religion is a subset of culture and influences on cultural values; the theoretical
approach used in the culture and accounting literature provides a structure within
which the relationship between religion and accounting may be examined (Sulaiman
and Willet, 2003).
Studies examining the relationship between religion and accounting (Gambling and
Karim, 1991; Hamid, Craig and Clarke, 1993; Baydoun and Willett, 1994; 1995)
have suggested that the ethical impact of Islam on accounting has the potential to be
significant.
Baydoun and Willett (1994; 2000) developed a theory as to what should, from the
point of view of consistency with ethical precepts, constitute the basis of a set of
Islamic Corporate Reports. They suggests that Islamic societies would be better
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served by an Islamic Corporate Reporting model which includes a current value
balance sheet (CVBS) and a value added statement (VAS) rather that of the
traditional Western reports of historic cost balance sheet (HCBS) and profit and loss
account (PL).
Doupnik and Tsakumis (2004) stated that culture is considered a powerful
environmental factor that affects financial reporting as well as how individuals
perceive and accounting information. Thus, cultural values of Moslem accounting
academicians may be can affect how they perceive the Islamic financial reporting.
Maali and Napier (2004) investigate the influence of Islamic principles in
determining the accounting practices of Jordan Islamic Bank when this bank was
established in the late 1970s. They found that, while sacred concerns were important
in setting the early accounting practices of the bank, there was a strong tension
between these and factors such as the need for the bank to compete commercially
with secular banks.
Maali (2005) investigate the effect of Islam on the accounting practices of Jordan
Islamic Bank for the first 24 years of its operations and found that the significance of
religious considerations for these practices substantially reduced over time. The
empirical evidence on the effect of Islam on accounting practices does not provide
much support for the normative literature.
Islamic principles are suggestive of a variety of implications for governance and
accounting. Reflecting upon Islamic principles, Kamla et al., (2006) engage with the
notion of accounting for the environment. Their endeavors are consistent with a
concern to contribute to a critical theoretical project seeking to develop a progressive
and emancipatory universalism that is respectful of difference, a project with its
accounting implications. In concluding, they point, among other things, to the irony
whereby Western transnational corporations have sought to promote their particular
brand of corporate social (and environmental) responsibility accounting in Arab
countries, variously influenced by Islam, with little to no mention of a notion of
accounting for the environment integral to and deeply rooted in Islam.
Mansoor Khan et al., (2008) articulate the case for Islamic banking in a very
comprehensive and effective manner. It depicts Islamic banking as a growing
discipline adding more ethical, competitive and diversified tools and systems into
global finance. It highlights the paradigm, theory and practice, achievements, pitfalls
and future prospects of Islamic banking. The study deals with the Islamic paradigm
of borrowing, lending and investment. It presents the conceptual model and practice
of Islamic banking. It covers other related issues over the recent development of
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Islamic banking across the globe. The research observes that Islamic banking has
made unprecedented progress over recent years. The Middle East, South Asia and the
Indian Subcontinent have emerged as hubs of Islamic banking. Western conventional
regulators and investors and other agents have also shown a greater interest in and a
receptive attitude towards Islamic banking. Despite all this, Islamic banking has been
facing some core problems and challenges that will have deep impacts on its future
growth and development.
Kamla (2009) explores the potential of aspects of contemporary Islamic accounting
research and practice to contribute to the critical accounting project in the latter's
efforts to achieve more emancipatory and enabling forms of accounting. The research
concludes that minimal critical theorizing, as well as the narrow instrumental and
mechanical emphasis of the majority of Islamic accounting research, are indications
that Islamic accounting research is diverting from its primarily proclaimed social and
moral roles. This is further exacerbated by the uncritical emulation and embracing of
conventional accounting operations and standards by so-called Islamic ones. The
research also attempts to identify ways forward for Islamic banking and accounting
research to realize more emancipatory praxis.
Farag (2009) presents a historical review of the evolution of accounting and
accounting profession in Egypt since the ancient Egyptian civilization to the modern
accounting practices. Egyptian accounting practice is divided into three stages: record
keeping (1883–1939); financial reporting under changing economic regimes (1939–
1975); and the move to adopt international accounting standards in an attempt to
liberalize and integrate the Egyptian economy into the global economy (1975–2008).
Dima et al., (2010) provide a synopsis of Islamic accounting characteristics as well as
to identify some of the determinants which led to its specificities. They explore
several aspects related to the Islamic accounting principles and its institutional
framework. The cultural paradigm is viewed as a differentiating key factor in the
elaboration and implementation of the accounting standards in the Islamic Word. the
elements of this paradigm are linked to the relative preference for IFRS adoption of
different Islamic countries. From the proposed analysis, it emerges the image of
Islamic Accounting’s complex nature, which seen as a distinct alternative to the
principles and views promoted by IFRS.
Farook et al., (2011) test a theoretical model of the determinants of Islamic banks'
social disclosures. In testing the hypotheses, the level of social disclosure in Islamic
banks' annual reports is gauged based on a benchmark derived from Islamic
principles. The sample comprised 47 Islamic banks in 14 countries and the data
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related to the dependent (Islamic banks social disclosures) variable are collected
mainly from the annual reports, while data for the independent variables
(determinants) are collected from various sources. Regression analysis conducted to
test the hypotheses. The major limitation of their research is the small sample size of
only 47 Islamic banking institutions; they argued that corporate social responsibility
(CSR) disclosure by Islamic banks varies significantly across the sample. According
to the regression results, variation is best explained by the “influence of the relevant
publics” and the “Shari'ah (SSB supervisory boards) corporate governance
mechanism” variables. Using alternative variable measures, the regression results
suggest that “level of social and political freedom” and “the proportion of investment
account deposits to total assets” are also significant determinants of Islamic banks'
CSR disclosure.
The growth of Islamic financial institutions is one of the main factors underlying the
emergence of a modern literature of Islamic accounting. Another factor is the
development of universities in Muslim countries, particularly those dedicated to the
wider advancement of Islamic sciences and their application to the modern world
(Napier, 2007). However, in Iran no research has conducted in the field of Islamic
accounting.
4) Research Methodology
Based on the above analysis and literature, the following hypotheses are postulated in
the study:
H1: Islamic accounting is consistent with Quranic and ethical values.
H2: Social responsibilities are considered in Islamic accounting.
H3: Paying attention to Zakat is great importance in Islamic accounting.
H4: Paying attention to Islamic matters has a major role in responding responsibility
in Islamic accounting
H5: The importance of gain and loss is decreased in Islamic accounting.
H6: Paying attention to Islamic matters leads to decreased economical and social
problems in Islamic accounting.
H7: In Islamic accounting, social matters are emphasized.
H8: Islamic accounting aims are developed based on profitability for decision-
making and responsibility.
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H9: Paying attention to Zakat is referred to as a barrier and limitation in Islamic
accounting.
H10: The end goal in Islamic accounting is to reach the Religion destination.
Statistical society of this research includes customers of bankers in Iran. For this aim,
150 questionnaires administrated among the Iranian bankers’ customers during 1-06-
2012 up to 30-06-2012. Totally 120 useable questionnaires are collected from the
participants.
This research is a descriptive-survey research. In this research according to previous
researches, aims and characteristics of Islamic accounting and consulting with
respected professors and specialists in the field of the research, the final questionnaire
designed in 20 questions. Questions 1, 2, 3 and 19 are concern to the first hypothesis,
question 4 is concerns to the second hypothesis, questions 5, 6, 7 and 10 are concern
to the third hypothesis, questions 12, 13, and 14 are concern to the fourth hypothesis,
questions 16 and 18 are connected with the fifth hypothesis, questions 9 and 20 are
connected with the sixth hypothesis, questions 11, 15, 8 and 17 are connected with
the 7th to 10th hypotheses respectively. The questionnaire is designed based on
Likert’s Scale (non-correct, a bit correct, fairy correct, fully correct), in which the
rating manner is 1-2-3-4, respectively. This questionnaire investigate aspects of
Quranic morale values, social responsibilities, Zakat paying, responding
responsibility, the importance of gain and loss, economical and social safety of
society, paying attention to social matters of society, profitable responding and
decision-making, paying attention to the barriers and limitations of Zakat and
realizing the Islamic Religion’s goals. Related professors and the experts approve the
designed questionnaire. The designed questionnaires had been confirmed in terms of
the narration style of their contents and outward format.
In present study in order to examine reliability, Cronbach’s Alfa Coefficient has
been used. To determine the appropriate sample size and to calculate Cronbach’s
Alfa, a pretest has been carried out. Cronbach’s Alfa is calculable when we have at
least two questions. Therefore, Cronbach’s Alfa can be calculated only for
hypotheses number 1, 3, 4, 5 and 6. In this study, Cronbach’s Alfa Coefficient for
investigating the degree of questions’ homogeneity of questionnaire is 76.70%,
which indicates that the questionnaire has a good accuracy and durability for
measurement. Given the primitive information, the sample size considered for this
study is at least 120 participants.
Cronbach’s Alfa Coefficient for investigating the degree of questions’ homogeneity
of hypotheses is shown in Table 1.
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Table 1. Cornbach's Alfa Coefficient for investigating the degree of questions’
homogeneity of hypotheses
Cronbach’s Alpha coefficient Question Number Description
0.271 1,2,3 and19 First hypothesis
- 4 Second hypothesis
0.658 5,6,7 and10 Third hypothesis
0.656 12,13 and14 Fourth hypothesis
0.767 16 and18 Fifth hypothesis
0.542 9 and 20 Sixth hypothesis
- 11 Seventh hypothesis
- 15 Eighth hypothesis
- 8 Ninth hypothesis
- 17 Tenth hypothesis
0.767 1-20 Whole of questions
The coefficients given in Table 1 indicate that the designed questionnaire is of
favorable stability.
In order to investigate the normality of variables Kolmogorov-Smirnov test is
employed. Since the level of significance for all of the variables is 0.000 and is less
than 0.05, so with 95% confidence, we can reject their normality. So, non-parametric
methods are used to conduct the tests.
5) Results of the study
The gathered data analyzed by SPSS software. First, observations are investigated by
descriptive, statistical methods. Distributions of gender, age, degree, field of study
and work experience and religion of respondents to questionnaire are shown in Table
2. The results in Table 2 show that 25% of respondents are male and 75% are female.
The greatest distribution among respondents is in 20-25 years age group and is equal
to 92.50% and the least distribution is in 25-30 years age group and is equal to
2.50%. 97.50% of respondents are undereducated students and 2.50% have the
bachelor degree. In terms of the field of study, 67.50% of respondents are in
Accounting, 5% are in Financial/Industrial Management, 2.50% are in Economics
and 25% are in Business/Governmental Management. 82.50% of respondents are
inexperienced, 7.50% have less than 5 years experience, 7.50% have a work
experience between 5 and 10 years and 2.50% have more than 10 years work
experience. All of the respondents have Islamic religion.
Journal of Islamic Economics, Banking and Finance, Vol. 10 No. 2, April - June 2014
168
Table 2. General information of participants
Variable Index Frequency Percentage
Gender
Male 30 25.00
Female 90 75.00
Age
20-25 111 92.50
25-30 3 2.50
30-35 6 6.00
Degree B.A. student 117 97.50
B.A. 3 2.50
Educational
field
Accounting 81 67.50
Financial/Industrial management 6 5.00
Economics 3 2.50
Business/Governmental Management 30 25.00
Experience
Without experience 99 82.50
<5 9 7.50
5-10 9 7.50
>10 3 2.50
Religion Islam 120 100
5.1) Testing of Hypotheses
Hypothesis 1: Islamic accounting is consistent with Quranic, ethical values.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Where 'm' is the median. In order to investigate the hypothesis, Wilcoxon’s test is
used. Associated results are presented in Table 3.
Table 3. A summary of the results of first hypothesis
Result Asymp. Sig.
(2-tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Confirmed 0.000 4218 84 153 9 1
Negative Rank: Islamic accounting is with Quranic, ethical values completely.
Positive Ranks: Islamic accounting is with Quranic, ethical values somewhat.
According to Table 3, because the level of significance is 0.000 and is less than 0.05
and also because the sum of negative ranks is equal to 4218 and is more than positive
A Study On The Influences Of Islamic Values On Iranian Accounting …..
169
ranks, therefore we can describe with 95% confidence, that Islamic accounting is
consistent with quranic, ethical values, so the 1st hypothesis is confirmed.
Hypothesis 2: Social responsibilities are considered in Islamic accounting.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Associated results are presented in Table 4.
Table 4. A summary of the results relating to second hypothesis
Result Asymp.
Sig. (2-
tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Confirmed 0.000 5530.5 81 1729.5 39 2
Negative Rank: Social responsibilities are considered in Islamic accounting
completely.
Positive Ranks: Social responsibilities are considered in Islamic accounting
somewhat.
According to Table 4 the level of significance is 0.000 and is less than 0.05, also the
sum of negative ranks is equal to 5530.5 and is more that positive ranks, therefore we
can say, with 95% confidence, that in Islamic accounting social responsibilities are
considered, so the second hypothesis is confirmed.
Hypothesis 3: Paying attention to Zakat is great importance in Islamic accounting.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Associated results are presented in Table 5.
Table 5. A summary of the results of the third hypothesis
Result Asymp. Sig. (2-tailed) Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Confirmed 0.000 4290 66 1926 45 3
Negative Rank: in Islamic accounting paying attention to Zakat is of great importance.
Positive Ranks: in Islamic accounting paying attention to Zakat is somewhat important.
Journal of Islamic Economics, Banking and Finance, Vol. 10 No. 2, April - June 2014
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As we can see in Table 5, the level of significance is 0.000 and is less than 0.05; also,
the sum of negative ranks is equal to 4290 and is more that positive ranks, therefore
we can say, with 95% confidence, that in Islamic accounting paying attention to
Zakat is of great importance, so the third hypothesis is confirmed.
Hypothesis 4: Paying attention to Islamic matters has a major role in responding
responsibility in Islamic accounting. The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
In order to investigate this hypothesis, Wilcoxon’s test is used. Associated results are
presented in Table 6.
Table 6. A summary of the results relating to fourth hypothesis
Result Asymp. Sig.
(2-tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Confirmed 0.000 6210 90 1050 30 4
Negative Rank: in Islamic accounting paying attention to Islamic matters has a completely important
role in responding responsibility.
Positive Ranks: in Islamic accounting paying attention to Islamic matters has a somewhat important
role in responding responsibility.
According to Table 6 the level of significance is 0.000 and is less than 0.05, also the
sum of negative ranks is equal to 6210 and is more that positive ranks, therefore we
can conclude, with 95% confidence, that in Islamic accounting paying attention to
Islamic matters has a major role in responding responsibility, so the fourth hypothesis
is confirmed.
Hypothesis 5: The importance of gain and loss is decreased in Islamic accounting.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Associated results are presented in Table 7.
A Study On The Influences Of Islamic Values On Iranian Accounting …..
171
Table 7. A summary of the results of the fifth hypothesis
Result Asymp. Sig.
(2-tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Rejected 0.424 3375 54 2841 57 5
Negative Rank: In Islamic accounting the importance of gain and loss is decreased
completely.
Positive Ranks: In Islamic accounting the importance of gain and loss is decreased
somewhat.
According to Table 7 the level of significance is 0.424 and is more than 0.05, and
also by comparing the negative and positive ranks, therefore we can conclude, with
95% confidence, that in Islamic accounting the importance of gain and loss is
decreased in a middle way, so the fifth hypothesis is rejected.
Hypothesis 6: Paying attention to Islamic matters leads to decreased economical and
social problems in Islamic accounting.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Associated results are presented in Table 8.
Table 8. A summary of the results of sixth hypothesis
Result Asymp.
Sig. (2-
tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Confirmed 0.000 5878.5 93 676.5 21 6
Negative Rank: In Islamic accounting paying attention to Islamic matters leads to
completely decreased economical and social problems.
Positive Ranks: In Islamic accounting paying attention to Islamic matters leads to
somewhat decreased economical and social problems.
Journal of Islamic Economics, Banking and Finance, Vol. 10 No. 2, April - June 2014
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According to Table 8, because the level of significance is 0.000 and is less than 0.05,
and also the sum of the negative ranks is equal to 5878.5 and is less than positive
ranks, therefore we can conclude, with 95% confidence, that in Islamic accounting
paying attention to Islamic matters leads to decreased economical and social
problems, so the sixth hypothesis is confirmed.
Hypothesis 7: In Islamic accounting social matters are emphasized.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Associated results are presented in Table 9.
Table 9. A summary of the results of seventh hypothesis
Result Asymp. Sig.
(2-tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Rejected 0.121 4201.5 51 3058.5 69 7
Negative Rank: In Islamic accounting social matters are completely emphasized.
Positive Ranks: in Islamic accounting social matters are somewhat emphasized.
According to Table 9, because the level of significance is 0.121 and is more than
0.05, therefore it can be stated, with 95% confidence, that in Islamic accounting
social matters are emphasized in a middle way, so the seventh hypothesis is rejected.
Hypothesis 8: Islamic accounting aims are developed based on profitability for
decision-making and responsibility.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Related results are presented in Table 10.
Table 10. A summary of the results of eighth hypothesis
A Study On The Influences Of Islamic Values On Iranian Accounting …..
173
Result Asymp. Sig.
(2-tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Confirmed 0.000 5482.5 75 1777.5 45 8
Negative Rank: in Islamic accounting aims are developed based on profitability
completely for decision-making and responsibility.
Positive Ranks: in Islamic accounting aims are developed based on profitability
somewhat for decision-making and responsibility.
According to Table 10, because the level of significance is 0.000 and is less than
0.05, and also because the sum of negative ranks is equal to 5482.5 and is less than
positive ranks, therefore we can say, with 95% confidence, that in Islamic accounting
aims are developed based on profitability for decision-making and responsibility, so
the eighth hypothesis is confirmed.
Hypothesis 9: Paying attention to Zakat is referred to as a barrier and limitation in
Islamic accounting.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Associated results are presented in Table 11.
Table 11. A summary of the results of ninth hypothesis
Result Asymp. Sig.
(2-tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Rejected 0.000 1888.5 33 5371.5 87 9
Negative Rank: In Islamic accounting paying attention to Zakat is completely
referred to as a barrier and limitation.
Positive Ranks: in Islamic accounting paying attention to Zakat is somewhat
referred to as a barrier and limitation.
According to Table 11, because the level of significance is 0.000 and is less than
0.05, and also because the sum of negative ranks is equal to 1888.5 and is less than
positive ranks, therefore we can say, with 95% confidence, that in Islamic accounting
paying attention to Zakat is not referred to as a barrier and limitation, so the ninth
hypothesis is rejected.
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Hypothesis 10: The end goal in Islamic accounting is to reach the Religion
destination.
The above hypothesis can be written as:
5.2:1
5.2:0
≠
=
mH
mH
Associated results are presented in Table 12.
Table 12. A summary of the results of tenth hypothesis
Result Asymp. Sig.
(2-tailed)
Negative Ranks Positive Ranks Hypothesis
Sum of
Ranks
N Sum of
Ranks
N
Confirmed 0.000 6528 96 732 24 10
Negative Rank: In Islamic accounting, the end goal is just to reach the Religion destination.
Positive Ranks: In Islamic accounting the end goal is somewhat is to reach the Religion
destination.
According to Table 12, because the level of significance is 0.000 and is less than
0.05, and also because the sum of negative ranks is equal to 6528 and is more than
positive ranks, therefore we can say, with 95% confidence, that in Islamic accounting
the end goal is to reach the Religion destination, so the tenth hypothesis is confirmed.
The summary of results of hypotheses is presented in Table 13.
Table 13. A summary of results about hypotheses of the study
10 9 8 7 6 5 4 3 2 1 Hypothe
sis
Confir
med
Rejec
ted
Confir
med
Rejec
ted
Confir
med
Rejec
ted
Confir
med
Confir
med
Confir
med
Confir
med
Result
4.2) other results
In addition to the hypotheses, accordance of each of the hypotheses of this study with
gender, age, and education, field of study and work experience of respondents has
been investigated. In order to investigate each of the hypotheses in terms of gender
the Mann-Whitney U’s test and in terms of age, education, field of study, and work
A Study On The Influences Of Islamic Values On Iranian Accounting …..
175
experience of respondents Kruskal Wallis’s test is employed. Table 14 shows the
summary of results about the accordance test of each hypothesis with respondents’
features.
Table 14. The summary of accordance test of each of the hypotheses with general
attributes of participants
Experience
(Kruskal
Wallis
Test)
Educational
field
(Kruskal
Wallis Test)
Degree
(Kruskal
Wallis
Test)
Age
(Kruskal
Wallis
Test)
Gender
(Mann-
Whitney
U Test)
General attributes of
participants
Hypotheses
0.030 0.565 0.694 0.083 0.047 The accordance of Islamic
accounting with Quranic,
ethical values
0.115 0.002 0.749 0.094 0.665 Level of social
responsibilities considered
in Islamic accounting
0.352 0.154 0.754 0.064 0.205 The importance of paying
attention to Zakat in Islamic
accounting
0.029 0.012 0.411 0.010 0.071 Paying attention to Islamic
matters in responding
responsibility
0.328 0.068 0.397 0.699 0.488 Decreased importance of
gain and loss in Islamic
accounting
0.001 0.109 0.035 0.106 0.518 Level of decreased social
and economic problems
given the Islamic matters
0.524 0.619 0.248 0.394 0.812 Emphasize on social
matters in Islamic
accounting
0.004 0.002 0.073 0.001 0.001
Level of development of
Islamic accounting’s goals
based on profitability for
decision-making and
responsibility
0.004 0.787 0.077 0.009 0.124 Barriers and limitations in
Islamic accounting given
the Zakat
0.105 0.028 0.322 0.212 0.552 The end goal in Islamic
accounting i.e. reaching to
Religion destination
When investigating each of hypotheses about gender of respondents it was revealed
that the level of significance for the first and eighth hypotheses is less than 0.05, and
Journal of Islamic Economics, Banking and Finance, Vol. 10 No. 2, April - June 2014
176
for other hypotheses is more than 0.05, so we can conclude, with 95% confidence,
that the level of social responsibility considered in Islamic accounting, the
importance of paying attention to Zakat in Islamic accounting, paying attention to
Islamic matters in responding responsibility, decreased importance of gain and loss in
Islamic accounting, level of decreased social and economic problems given the
Islamic matters, emphasize on social matters in Islamic accounting, barriers and
limitations in Islamic accounting given the Zakat and the end goal in Islamic
accounting i.e. reaching to Religion destination are identical in terms of respondent’s
gender.
When investigating each of hypotheses about the age of respondents it was revealed
that the level of significance for the fourth, eighth and ninth hypotheses is less than
0.05, and for other hypotheses is more than 0.05, so we can conclude, with 95%
confidence, that the accordance of Islamic accounting with Quranic, ethical values,
that the level of social responsibility considered in Islamic accounting, the
importance of paying attention to Zakat in Islamic accounting, decreased importance
of gain and loss in Islamic accounting, level of decreased social and economic
problems given the Islamic matters, emphasize on social matters in Islamic
accounting, and the end goal in Islamic accounting i.e. reaching to Religion
destination are identical in terms of respondent’s age. Also, by using test that was
calculated by Prism software, the role of paying attention to Islamic matters in
responding responsibility, there is just a significant difference between 20-25 years
and 30-35 years age groups. In terms of the level of development of Islamic
accounting goals base on profitability for decision-making and responsibility there is
no significant difference between any groups. In terms of barriers and limitations in
Islamic accounting about Zakat there in just one significant difference between 25-30
years and 30-35 years age group.
When investigating each of hypotheses about the education of respondents it was
revealed that the level of significance for the sixth hypothesis is less than 0.05, and
for other hypotheses is more than 0.05, so we can conclude, with 95% confidence,
that just the level of decreased social and economic problems given the Islamic
matters is different in terms of education and for the rest of the hypotheses there is no
difference in terms of education. In addition, Dunn's Multiple Comparison did not
show any significant difference in terms of the level of decreased social and
economic problems given the Islamic matters among educational groups. When
investigating each of hypotheses about the field of study of respondents it was
revealed that the level of significance for the second, fourth, eighth and tenth
hypotheses is less than 0.05, and for other hypotheses is more than 0.05, so we can
conclude, with 95% confidence, that the accordance of Islamic accounting with
Quranic, ethical values, the importance of paying attention to Zakat in Islamic
accounting, decreased importance of gain and loss in Islamic accounting, level of
A Study On The Influences Of Islamic Values On Iranian Accounting …..
177
decreased social and economic problems given the Islamic matters, emphasize on
social matters in Islamic accounting and barriers and limitations in Islamic
accounting about Zakat have no difference in terms of the field of study. In addition,
by using Dunn’s Multiple Comparison test the level of social responsibilities
considered in Islamic accounting, there is only significant difference between
financial/ industrial management and business/ governmental management fields of
study. In terms of the role of paying attention to Islamic matters in responding
responsibility, there is no significant difference between any groups. In terms of the
level of development of Islamic accounting goals base on profitability for decision-
making and responsibility there is a significance difference between educational
groups of accounting and business/governmental management. In terms of end goal
in Islamic accounting, i.e. reaching to Religion destination there is a significant
difference between educational groups of economy and business/governmental
management.
Finally, When investigating each of hypotheses about the work experience of
respondents it was revealed that the level of significance for the first, fourth, sixth,
eighth and ninth hypotheses is less than 0.05, and for other hypotheses is more than
0.05, so it can be stated, with 95% confidence, that the level of social responsibilities
considered in Islamic accounting, the importance of paying attention to Zakat in
Islamic accounting, decreased importance of gain and loss in Islamic accounting,
emphasize on social matters in Islamic accounting, and the end goal in Islamic
accounting i.e. reaching to Religion destination are identical in terms of Religion
destination. In addition, by using Dunn’s Multiple Comparison test, there is no
significant difference between any work experience groups in terms of the
accordance of Islamic accounting with Quranis, ethical values. In terms of the role of
paying attention to Islamic matters in responding responsibility, there is a significant
difference between the groups who have no work experience and the groups with 5 to
10 years work experience. The level of decreased social and economic problems
given the Islamic matters there is a significant difference between the groups who
have no work experience and the groups with less than 5 years experience. There is a
significant difference between people with less than 5 years and more than 10 years
work experience too. In is important to note that, in terms of the barriers and
limitations in Islamic accounting about Zakat there is a significant difference between
the groups who have no work experience and the groups with 5 to 10 years work
experience. In addition, there is a significant difference between people with 5 to 10
and more than 10 years work experience. The summary of results about the
accordance of each of the hypotheses with gender, age, education, field of study and
work experience of respondents is shown in Table 15.
Journal of Islamic Economics, Banking and Finance, Vol. 10 No. 2, April - June 2014
178
Table 15. The summary of results about the accordance of each of the hypotheses with general
attributes of respondents
Experience
Educational
field
Degree
Age
Gender
General attributes of
participants
Hypotheses
D N N N D The accordance of Islamic
accounting with Quranic,
ethical values
N D N N N Level of social responsibilities
considered in Islamic
accounting
N N N N N The importance of paying
attention to Zakat in Islamic
accounting
D D N D N Paying attention to Islamic
matters in responding
responsibility
N N N N N Decreased importance of gain
and loss in Islamic accounting
D N D N N Level of decreased social and
economic problems given the
Islamic matters
N N N N N Emphasize on social matters in
Islamic accounting
D D N D D Level of development of
Islamic accounting’s goals
based on profitability for
decision-making and
responsibility
D N N D N Barriers and limitations in
Islamic accounting given the
Zakat
N D N N N The end goal in Islamic
accounting i.e. reaching to
Religion destination
Note:
D=There is a significant difference.
N=There is not a significant difference.
5) Conclusion and remarks
Since Islam pays a lot of attention to business activities and God in Quran has
presented the required guidelines for Man’s salvation in this world and the other
world, so in economic activities the end goal should be salvation, and accounting
A Study On The Influences Of Islamic Values On Iranian Accounting …..
179
should be in accordance with this goal as the presenting tool for the information in
economic environment. Therefore, the goals and characteristics of Islamic accounting
not only should present an appropriate picture of business entity, but also should be
in a way that encourages business entities toward beneficence and avoidance of
injustice. There have stated various goals for Islamic accounting like profitability for
decision-making, responsibility, Islamic responsibility and responsibility through
Zakat. In Islamic accounting emphasize is on following the Religion and presenting
the required information, especially about social responsibility.
In this research, we investigate the connection of factors such as Quranic ethical
values, social responsibilities, paying Zakat, responding responsibility, importance of
gain and loss, society’s economical and social safety, paying attention to social
matters of society, profitable responding and decision-making, paying attention to
Zakat’s barriers and limitations and realizing Religion’s goals in Islamic accounting.
The results of conducting the tests indicate that if we use Islamic accounting,
importance of gain and loss do not decrease, there is no more emphasize on social
matters and paying attention to Zakat cannot be considered as a barrier and
limitation. Another result of this study can be the equality of the degree social
responsibilities considered, the importance of paying attention to Zakat, paying
attention to Islamic matters in responding responsibility, decreased importance of
gain and loss, the degree of decreased social problems given the Islamic matters,
emphasize on social problems, barriers and limitations in Islamic accounting about
Zakat and the end goal in reaching the Religion destination with the gender of
respondents. In addition, only the degree of decreased social and economical
problems given the Islamic matters is different and the rest of the hypotheses are
identical in terms of education.
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